Eastpointe sues NC DHHS and Nash County

Eastpointe has sued the North Carolina Department of Health and Human Services (NC DHHS), Trillium, and current Secretary Mandy Cohen and former Secretary Richard Brajer who served under Gov. Pat McCrory, and Nash County claiming they have conspired to undermine Eastpointe’s viability and have undermined the ability of Medicaid patients to receive services. The law suit was filed on June 8 in the United States District Court, Eastern District of North Carolina, Western Division, located in Raleigh. Read the lawsuit in its entirety here.

Eastpointe MCO provides services to Bladen County and Nash County has announced plans to withdraw from the Eastpointe network and join Trillium. Eastpointe, in its law suit, asked the court to issue an injunction stopping Nash County from leaving the Eastpointe network as well as a judgment against Brajer in the amount of $75,000 or as deemed appropriate by the court. The law suit also seeks a judgment declaring Brajer’s approval of Nash County’s withdrawal from Eastpointe’s network as null and void.

The dispute arose over the fact former NC DHHS Secretary Brajer approved the withdrawal of Nash County from Eastpointe and allowed the county to join with Trillium. The change of network was originally supposed to have taken place in April but due to a delay, was pushed back to July, according to reports.

Eastpointe is also engaged in merger talks with Cardinal. The merger has been delayed and is awaiting final approval from the NC DHHS.

Eastpointe CEO Sarah Stroud alleges in the court filing that by allowing Nash County to withdraw, it will disrupt mental health, developmental disability and substance abuse services for those patients who are currently being served through Eastpointe’s provider network. The law suit alleges that by allowing Nash County to withdraw there will be a lapse of care for those patients and some patients will be forced to leave providers with whom they have long established relationships.

Eastpointe released a statementregarding the law suit. “This action is necessary to compel DHHS to comply with North Carolina law and to ensure patients and families continue to receive behavioral health services without delay or interruption.”

“Former Secretary Brajer’s hasty decision to approve Nash County’s request without establishing a process for public input in the final days of the McCrory Administration clearly violated the law,” said Sarah Stroud, CEO of Eastpointe. “Brajer took away the voice given to members, families, providers and the general public.”

“When DHHS ignores the General Assembly’s reasonable requirements, it sets a bad precedent,” Stroud said. “It is in our members’ best interests to ensure that DHHS, Nash County and others follow the rules.”

The law suit makes numerous allegations of a concerted effort to undermine Eastpointe and its operations. Some of the allegations include:

*Brajer, acting in his role as Secretary of NC DHHS, proposed a merger between Trillium and Eastpointe in 2016. It is also noted in the lawsuit Brajer, in a memorandum regarding the merger also referenced rules for counties withdrawing from MCO/LMEs and aligning with a different MCO/LME. According to the law suit, Brajer’s memo stated because the rules were not yet in effect regarding such movement, any requests to withdraw from an MCO/LME would be placed on hold.

*The lawsuit also alleges that on May 11, 2016, Denauvo Robinson, who served on the governing board of Trillium, wrote to Brajer and undermined Eastpointe’s reputation which subsequently resulted in the merger between Eastpointe and Trillium being thwarted.

*The law suit also makes allegations of hostile takeover tactics used by by Trillium citing the letter and other memos written to Brajer by Trillium CEO Leza Wainwright.

*The law suit also alleges Leza Wainwright, while serving as president of the North Carolina Council of Community Mental Health, Developmental Disability and Substance Abuse took adverse actions against Eastpointe.

*The law suit also alleges Brajer allowed Nash County to withdraw from its contract with Eastpointe when there were no rules in place in the General Assembly for such an action. Eastpointe alleges Brajer did not have the authority to make such a decision, his actions denied the public the right to comment on the county’s intention to end its relationship with Eastpointe.

In 2015, then Eastpointe Chief Financial Officer William Robert Canupp was arrested and charged with financial card transaction fraud and embezzlement. Former Eastpointe CEO Ken Jones retired from his position. At the May 23, 2017, Eastpointe board meeting, there was no discussion of the allegations nor discussion of any efforts being made by Eastpointe to recover the funds.

An audit of Cardinal Innovations performed by North Carolina Auditor Beth Woods’ office found the salary of Cardinal CEO Richard Topping to be in violation of North Carolina law.